C-55/75

HAUPTZOLLAMT BERLIN-PACKHOF,

on the validity of monetary compensatory amounts imposed under Regulation (EEC No 974/71 of the Council,

THE COURT

composed of: R. Lecourt, President, R. Monaco, H. Kutscher, Presidents of Chambers, A. M. Donner, J. Mertens de Wilmars, P. Pescatore, M. Sørensen, Lord Mackenzie Stuart and A. O'Keeffe, Judges,

Advocate-General: G. Reischl

Registrar: A. Van Houtte

The order making the reference and the which, by order of 4 June 1975, referred written observations submitted under the following questions to the Court of Article 20 of the Protocol on the Statute Justice under Article 177 of the Treaty: of the Court of Justice of the EEC may 1. Was it still compatible with be summarized as folows: Community law on 25 April 1974 to levy a monetary compensatory charge under Regulation (EEC) No 974/71 of I — Facts and procedure the Council in the version in force on 25 April 1974 when cheese of sheep's Regulation (EEC) No 974/71 of 12 May milk which comes under heading 1971 OJ, English Special Edition, 1971 04.04 E 1 64 of the Common (I), p. 257) established a system of Customs Tariff was imported from monetary compensatory amounts in the third countries, especially in view of trade between the Member States and the exemptions under Regulation with third countries. According to the (EEC) No 1265/73 of the Commission 6th recital of the preamble to that of 14 May 1973 for imports of other regulation, these amounts must be types of cheese from payment of a limited to the amounts strictly necessary monetary compensatory amount? to compensate the incidence of the If Question 1 is answered in the monetary measures on the prices of basic affirmative: products covered by intervention arrangements and may only be applied 2. Is the monetary compensatory charge in cases where this incidence would lead of DM 63.80 per kg levied on 25 to difficulties. April 1974 on imports of cheese of sheep's milk from third countries When a consignment of 14 490 kg of justified? In particular how can this sheep's milk cheese from Bulgaria which rate of charge be justified had been purchased under the terms of a arithmetically? long-term contract dated 29 November The Finanzgericht states in the grounds 1972, the price for which was laid down of its order that the reason why it is in DM, and which comes under tariff doubtful whether the charge in question heading 04.04 E I b 4 of the Common is in conformity with Regulation (EEC) Customs Tariff, was imported into No 974/71 is that since May 1973 certain Germany on 25 April 1974, the Italian and Swiss cheeses have been defendant in the main action demanded granted exemption from payment of from the plaintiff in the main action the the monetary compensatory amount payment of a monetary compensatory (Regulation (EEC) No 1265/73 of the amount of DM 9 244.62, calculated on Commission of 14 May 1973 altering the the basis of a rate of DM 63.80 per 100 monetary compensatory amounts, OJ kg L 130 of 17 May 1973, p. 1). The Finanzgericht takes the view that the The plaintiff in the main action varieties of cheese which have been considered that request as incompatible granted exemption have a considerably with Community law and brougth the greater importance on the market in matter before the Finanzgericht Berlin milk products than sheep's milk cheese.

If their importation cannot cause consolidated as a system. In Case 34/74 'difficulties' within the meaning of (Judgment of 12 November 1974, Regulation (EEC) No 974/71, the same Roquette Frères v French State, [1974] applies to sheep's milk cheese. ECR 1229) the Court pointed out that 'the sole objective of the introduction of compensatory amounts was to neutralize II — Written observations sub the effect of disturbances arising in mitted under Article 20 of agricultural trade provoked by the the Protocol on the Statute fluctuation of exchange rates for the of the Court of Justice of currencies of certain Member States'. the European Communities Finally, in Case 74/74 (Judgment of 14 May 1975, Comptoir National Technique A — Observations submitted by the Agricole (CNTA) SA v Commission of plaintiff in the main action the European Communities, [1975] ECR 533) the Court stated that as the application of compensatory amounts is a The first question measure of an exceptional nature, the existence of disturbances to trade in According to the plaintiff in the main agricultural products is a condition not action the imposition of a monetary only of the introduction but also of the compensatory amount on sheep's milk maintenance of compensatory amounts cheese which comes under tariff heading for a specific product. 04.04 E I b 4 of the Common Customs Tariff is not compatible with Regulation The plaintiff in the main action (EEC) No 974/71 of the Council or with acknowledges that the Commission other provisions of Community law. enjoys a wide discretion in that respect but it claims that the latter's use thereof I — The legality of the compensatory with regard to cheeses which come under amount heading 04.04 E I b 4 constitutes a case of mususe of power.

. . varieties of cheese the importation of would lead to disturbances in trade in which has a much greater effect on agricultural products'. In its case-law on the market in milk products than that compensatory amounts, the Court of of imports of sheep's milk cheese. Justice has adopted a firm viewpoint on 2. Secondly, the misuse of power follows the concept of 'disturbance'. from the fact that there was no possibility of a disturbance, even if, as In Case 5/73 (Judgment of 24 October the Court had acknowledged in its 1973, Balkan-Import Export GmbH v abovementioned judgment of 14 May Hauptzollamt Berlin-Packhof [1973] 1975, market conditions as well as ECR 1091), the Court stressed the monetary factors were taken into temporary nature of the compensatory account in order to judge the amounts which was determined by the existence of a disturbance. crisis situation. Meanwhile, the system of In spite of the arguments which, compensatory amounts has, however, according to the plaintiff, prove that been integrated into the common the importation of the product in agricultural policy and improved and question cannot cause a disturbance

market, the charge which has been Besides, the Commission has imposed is no longer, even partially, acknowledged the disturbing nature of in the nature of a monetary the compensatory amounts with regard compensatory amount but, on the to the uniformity of the market in contrary, constitutes a charge having various communications quoted by the equivalent effect which is plaintiff in the main action. incompatible both with Article 19 of Regulation (EEC) No 804/68 OJ, English Special Edition, 1968 (I), p. III — Alternatively, if the answer to 176) and with the Common Customs the first question is in the Tariff. affirmative II — The legality of the rate of the compensatory amount in The plaintiff in the main action suggests question that the Court should call upon an expert to give his opinion on the incidence of The plaintiff in the main action recalls monetary measures on the price of that the compensatory amounts must be sheep's milk cheese at the date of the limited to the amounts strictly necessary imports before replying to the second to compensate the incidence of the question. monetary measures on the prices of basic products covered by intervention B — Observations submitted by the arrangements. The maintenance of the Commission compensatory amounts ought in addition to be dependent upon that incidence. According to the Commission, the In the present case the compensatory wording used in the first question amounts were fixed at too high a level: indicates that the Finanzgericht considers the revaluation of the Deutsche Mark was that at the date when the goods in to a certain extent compensated by the question were imported, 25 April 1974, revaluation of some foreign currencies, certain factors argue in favour of an the costs of German producers who were appraisal other than that of the Court of importing machinery of fertilizers have Justice its judgment of 24 October 1973 fallen because of the revaluation, German (Case 5/73, quoted above) when it replied agriculture has benefited from that the questions which had been considerable compensatory payments referred had not revealed any factors such from public funds and the particularly as to affect the validity of the high inflation rates in some countries countervailing charge imposed on have caused their offer prices to rise. imports of Bulgarian sheep's milk cheese.

April 1973 (OJ L 114 of 30. 4. 1973, of the compensatory amount with regard p. 4). to the product in question in so far as the legal conditions laid down in The first question Regulation (EEC) No 974/71 are still fulfilled. This is indeed the case since, with regard to Bulgarian sheep's milk I — The existence of a disturbance in cheese, the situation of the market is still the agricultural market exactly the same as at the date of the imports which were the subject of the The Commission examines the argument judgment in Case 5/71, Balkan-Import that the imports of Bulgarian sheep's Export GmbH v Hauptzollamt milk cheese cannot cuase 'disturbances Berlin-Packhof. in trade in agricultural products' within the meaning of the last paragraph of (c) The attitude of the Commission is, Article 1 (2) of Regulation (EEC) No moreover, not at all inconsistent and it 974/71 as amended by Article 1 of does not exceed the discretionary, power Regulation (EEC) No 2746/72 of the which the case-law of the Court has Council. acknowledged, in particular in its judgment of 24 October 1973 (Case (a) Both the Advocate-General and the 43/72, Merkur-Außenhandels-GmbH v Court have already rejected that Commission of the European argument in Case 5/73 stating that 'the Communities, [1973] ECR 1055), in necessarily general and flat-rate nature of which it is stated that the question is the compensatory amounts system and essentially whether the Commission has the need to adapt quickly to constant used that power arbitrarily. In this fluctuations in currency justified the connexion an answer has been given in Commission having considered Case 5/73 to the question of the disturbances only in relation to groups of exemption granted to the Italian cheeses products, irrespective of origin ([1973] Grando Padana and Parmigiano ECR 1116). Reggiano.

whether or not there is a danger of (2) The second is that importers of disturbance. It adds that the exemption Bulgarian sheep's milk cheese benefit has also been granted for reasons of from a special system of imports commercial policy. Switzerland has which ought not in spite of the always taken the view that the monetary imposition of the monetary compensatory amounts infringe the compensatory amount to put them in provisions of the GATT to the extent to a less favourable position than if the which they are in excess of the monetary compensatory amount had maximum amount of the bound customs not been imposed. Regulation (EEC) duties within the framework of the No 664/74 of the Council of 28 GATT. Although it contests that March 1974 (OJ L 85 of 29. 3. 1974, argument from the legal point of view, p. 54) provides, inter alia for the the Commission is inclined to take it products in question, for a reduction into consideration in order to avoid in the levies when they are imported difficulties with a trading partner of the from third countries by increasing Community. It considers that such the minium prices (free-at-frontier considerations are legitimate within the prices) at which they are imported. context of the system of monetary compensatory amounts for Regulation Article 16 of Regulation (EEC) No (EEC) No 974/71 cannot be applied 1463/73 of the Commission of 30 May independently of the other aspects of 1973 (OJ L 146 of 4. 6. 1973, p. 1) Community policy and in particular the provides. objectives with regard to commercial policy laid down in Article 110. All the 'With respect to: basic regulations on the organization of (a) milk and milk products: the value the agricultural markets recall the need free-at-frontier of products falling to take appropriate account of the within subheading ... 04.04 E I b) 4 objectives laid down in that provision. ... are considered to have been

observed at the time of importation amount, whilst in the first case the from third countries if, for the exporting State achieves no benefit since product in question, the offer price in the goods are offered at a lower price. the case of depreciation of the currency of the importing Member The existence of the special system of State increased ... by the amount reduced minimum offer prices set out referred to in paragraph 2 ... is not above cannot however be interpreted as less than ... the value free-at-frontier meaning that the importation of the in question.' product in question is not capable of To the amount referred to in the first leading to disturbances in the importing indent of paragraph 1 is obtained Member State. That system is a by multiplying ... the value compromise between the basic need to free-at-frontier ... by a coefficient apply monetary compensation, on the corresponding to the percentage of one hand, and considerations of appreciation or depreciation of the commercial policy on the other. It is currency of the importing Member valid as long as the observance of the State.' (reduced) minimum price seems generally to preclude any real danger for In other words, under Regulation (EEC) the Community market. No 664/74 of the Council, in conjunction with Article 16 of The Commission adds that another Regulation (EEC) No 1463/73 of the reason for the maintenance of the system Commission, Bulgarian cheeses which of compensatory amounts is their could be admitted into the Community importance in intra-Community trade. In whilst being subject to a reduced levy if the present case the result of simply it observed a minimum free-at-frontier abolishing the compensatory amounts price on the basis of which the levy was would be that a product from a third calculated could be admitted at a lower country could be imported into the price without increasing the levy. The Community via the Member State in difference between the former minimum which the relationship between the price and the reduced minimum price national currency and the unit of account represents precisely the reduction of the is the most favourable for importation at price, of that product expressed in DM the minimum price and then re-exported which is the result of the revaluation of to Member States with stronger that currency. As the objective of the currencies without any monetary monetary compensatory amount is compensatory amounts being imposed precisely to compensate that difference on the price which has been artificially in price, the two regulations cancel one lowered in that way. another out.

In the former system different accordance with Article 2 (2) of compensatory amounts were applied Regulation (EEC) No 974/71, from that according to whether the trade was applicable to butter and skimmed milk intra-Community or with third countries. powder, which are basic products in Since that system involved an excessive respect of which there are intervention increase in the number of compensatory prices. Although by comparison with amounts, Regulation (EEC) No 648/73 Case 5/73 the method of deriving the and afterwards Regulation (EEC) No calculation has been improved by 1463/73 established a 'basic making a distinction according to compensatory amount' applying to both categories of cheese, it has not been trade between Member States and with fundamentally altered and the grounds third countries. The defects arising from on which the Court of Justice the standard nature of that basic amount acknowledged the legality of the cruder are corrected by the application of a method which was used at that time in 'monetary coefficient' applied to the Case 5/73, apply a fortiori in the present levies and repayments and expressing the case.

The method of calculation of the The Advocate-General delivered his compensatory amount applicable to the opinion at the hearing on 17 December product in question is derived in 1975.

JUDGMENT OF 22. 1. 1976 - CASE 55/75

Law

1 By an order dated 4 June 1975 which was received at the Court Registry on 24 June 1975, the Finanzgericht Berlin referred to the Court of Justice two questions under Article 177 of the EEC Treaty on the validity of the provision which is contained in Part 5 of Annex I of Regulation No 725/74 of the Commission of 29 March 1974 (OJ L 89 of 1. 4. 1974, pp. 1 and 18) amending the monetary compensatory amounts and according to which the compensatory amount to be imposed on the importation into the Federal Republic of Germany of products under heading 04.04 E I (b) 4 of the Common Customs Tariff (cheese of sheep's milk or buffalo milk, in containers containing brine, or in sheep or goat skin bottles) (OJ L 1 of 1. 1. 1974) is fixed at DM 63.80 in so far as the provision relates to such products imported from Bulgaria.

BALKAN-IMPORT EXPORT v HAUPTZOLLAMT BERLIN-PACKHOF

permit the exchange rate of their currency to fluctuate by a margin wider than the one authorized by the international rules in force on 12 May 1971 to charge or grant as appropriate, on the export or import of certain agricultural products, compensatory amounts intended to neutralize the incidence of currency fluctuation on the price of these products in trade between Member States or with third countries. Subparagraphs (a) and (b) of Article 1 (2) of Regulation No 974/71 provide that the charge or grant of compensatory amounts shall apply to those agricultural products covered by intervention arrangements under the common organization of the markets and to those products the price of which depends on the price of the products referred to under (a) and which are governed by a common organization of the markets or are the subject of a specific arrangement under Article 235 of the Treaty.

As to the first question

4 It appears from the preamble to the order making the reference that the first question is concerned in the first place with whether the validity of the provision in question could be affected because of the fact that its scope of application extends to the product in question whereas the currency measures which caused the system of compensatory amounts to be established, in particular the appreciation in value of the DM, could no longer on 25 April 1974 have the consequence that the importation from Bulgaria of the product in question could be such as to cause disturbances on the German market for agricultural products.

9 Article 1 (2) of Regulation No 974/71 (as amended) cannot be interpreted as obliging the Commission to decide case by case, or in respect of each product individually, and making distinctions according to the country of export, whether there is a risk of disturbance. The very terms of this provision show that evaluations of a general nature may be made in this respect. In particular, compelling reasons relating to the practicability of the system of compensatory amounts enable groups of products to be taken into consideration in assessing the possibility of dusturbances in trade in agricultural products. Such may especially be the case for a group of products under the same tariff heading which are subject to the same levy rules.

10 In addition, a different assessment of the possibilities of disturbances which might be caused by the importation of one and the same product according to its geographical origins would have the effect of encouraging deflections of trade apart from the fact that it would itself also endanger the practicability of the system. Finally, the Commission must not only take into consideration the effect of the depreciation or the appreciation of the currency of a Member State on trade between third States and this State but it must also take account

of the effect of this depreciation or appreciation on trade between different Member States with regard to the group of products in question. Indeed it appears from the documents produced by the Commission that if the compensatory amounts here criticized were not maintained trade might be

13 Referring to the exemption from payment of compensatory amounts granted to certain Italian and Swiss varieties of cheese, the German court then asks whether, in refusing the same treatment to cheese of sheep's milk coming from Bulgaria, the Commission did not violate the principle of equality of treatment. In this connexion it refers to the argument that if the varieties of cheese which were exempted do not, in the opinion of the Commisson, cause disturbances, it follows that the importation of Bulgarian cheese of sheep's milk, too, cannot have such an effect.

14 Although Article 2 of Regulation No 974/71 of the Council, by specifying the method of calculating the compensatory amounts, determines the amounts

JUDGMENT OF 22. I. 1976 — CASE 55/75

which cannot be exceeded, it does not follow that the Commission could not undertake to apply lower amounts or to grant negotiated exemptions in respect of certain third countries and for reasons relating to the exercise of other powers which it holds under the Treaty. In the Treaty there exists no general principle obliging the Community, in its external relations, to accord to third countries equal treatment in all respects and in any event traders do not have the right to rely on the existence of such a general principle.

17 The plaintiff in the main action alleges that the rate of DM 63.80 per 100 kg is in breach of the principle contained in the final recital of the preamble to Regulation No 974/71 of the Council according to which 'the compensatory amounts should be limited to the amounts strictly necessary to compensate

BALKAN-IMPORT EXPORT v HAUPTZOLLAMT BERLIN-PACKHOF

the incidence of the monetary measures on the prices of basic products covered by intervention arrangements'.

19 In view of these considerations examination of the questions referred has revealed nothing capable of affecting the validity of the compensatory amount in question.

Costs

20 The costs incurred by the Commission of the European Communites which submitted observations to the Court are not recoverable. As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

OPINION OF MR REISCHL — CASE 55/75

On those grounds,

THE COURT

Registrar President

OPINION OF MR ADVOCATE-GENERAL REISCHL DELIVERED ON 17 DECEMBER 1975 1

Mr President, the price is agreed in German marks. In Members of the Court, accordance with Community rules which were to be examined, from various points Balkan-Import Export, which has a of view, in cases before the Court for a registered office in Berlin, regularly preliminary ruling the sum of DM imports from Bulgaria into the Federal 9 244.62 was charged by way of a Republic of Germany cheese of sheep's monetary compensatory payment at the milk on the basis of a long-term contract frontier on a consignment which was made with the Bulgarian national trade cleared into free circulation on 25 April department 'Rodopa-Impex' for which 1974.

I — Translated from the German.